UPDATE 1-U.S. ready to back bigger EU stability fund-source

* Washington worried about global fallout from Europe crisis

* U.S. prepared to top up IMF contribution to fund-source

* Remarks come as U.S. envoy travels to Europe for talks

(Adds context, market reaction)

By John O’Donnell

BRUSSELS, Dec 1 (BestGrowthStock) – The United States would be ready
to support the extension of the European Financial Stability
Facility via an extra commitment of money from the International
Monetary Fund, a U.S. official told Reuters on Wednesday.

“There are a lot of people talking about that. I think the
European Commission has talked about that,” said the U.S.
official, commenting on enlarging the 750 billion euro ($980
billion) EU/IMF European stability fund.
“It is up to the Europeans. We will certainly support using
the IMF in these circumstances.”

“There are obviously some severe market problems,” said the
official, speaking on condition of anonymity. “In May, it was
Greece. This is Ireland and Portugal. If there is contagion
that’s a huge problem for the global economy.”

The remarks foreshadow a visit to Europe this week by a U.S.
Treasury envoy who is expected to visit Berlin, Madrid and Paris
to hold talks on the ramifications of the debt crisis.

The developments have echoes of the pressure applied by
Washington on European capitals last May to create the near $1
trillion EFSF safety net that was last week used to rescue
Ireland after its banking crisis spiralled out of control.

The IMF, whose biggest single shareholder is the United
States, has committed 250 billion euros to the EFSF.

While reluctant to dictate to Europe how it should address
the unfolding debt crisis, the U.S. government is growing
concerned about the global fallout of Europe’s predicament.

U.S. Treasuries’ prices fell and the euro strengthened
against the dollar on Wednesday after the news that the United
States would be prepared to support an enlarged EFSF. (EUR=: )

Germany, whose leaders have expressed frustration at the
market backlash against their plans to solve the euro zone’s
debt problems, does not want to make the stability fund larger.

(Reporting by John O’Donnell; Editing by Ruth Pitchford)

UPDATE 1-U.S. ready to back bigger EU stability fund-source